The mortgage-fueled financial disaster of 2008 was not an equal-opportunity crisis.
Two of the surviving American megabanks recovered swiftly from the global calamity, while the other two are down for the count:
BAC Total Return Price data by YCharts. Shaded areas denote U.S. recessions.
Citigroup (C 0.30%) lost its coveted spot on the Dow Jones Industrial Average (^DJI 0.96%) in 2009, while Bank of America (BAC +0.43%) still clings to the market's most widely followed index. But how long can the red, white, and blue money-center maintain that distinction? Bank of America's shares have lost 90% of their value in five years' time, and its government-approved quarterly dividend remains a lousy penny per share:
BAC Dividend data by YCharts. Shaded areas denote U.S. recessions.
If Bank of America ever manages to increase its dividend again, it would be a sure sign that the company can check out of the intensive-care unit. For one, the bank's own management and board would have to conclude that cash flows and the balance sheet can support a richer payout. But more importantly, the decision would have to pass muster with government regulators, too.
A dividend boost from American banks can't be a marketing move these days. It's more like an official stamp of approval from the people who design financial stress tests. That's why any dividend increase from Bank of America would result in a huge boost to its share prices. Investors would not only cash in larger quarterly checks, but they could also assume that the deeply wounded business is back on the mend.
Will Bank of America recover or die? I'm not the Fool's finest banking expert by a long shot, but I can certainly point you to the guy who is.
Our chief analyst for the financial sector, Anand Chokkavelu, has pondered the circumstances that would drop Bank of America's shares from $10 to $5 -- or shoot them past $20.
